Let's talk about Best Practices for kitting and assembly. They mean different things depending on your position within the supply chain. Many companies use kitting and assembly interchangeably together but they are indeed different.
Manufacturers typically use the term assembly while wholesaling industry (comprised of 3PL and distribution companies) use kitting. You are either combining raw materials to create a finished good, or combining already finished goods into a larger group. Even if you have raw goods, you can still kit for assembly. Kitting is for anyone who wants to combine group items together, build a product, or make a master item.
If you are a distributor looking to build business with just-in-time manufacturers, kitting is a value-added service to offer to prospects during your sales/business development conversations. If you are a 3PL, you may have manufacturing customers that, due to a lack of storage space for example, may want to send you raw goods for kitting.
Kitting Defined: it depends on your perspectiveKitting applications are wide and varied. Dell uses the process to assemble the millions of desktop and laptop computers that it annually sells. In this case, it is assembling finished goods into a larger whole. In contrast, a more classic manufacturer will deliver predetermined quantities of components and subassemblies to the factory floor where they are placed together in specific containers. There are also multiple other versions: * Light assembly of components or parts into defined units * The physical task of collecting and assembling materials that serve as components of an assembled presentation, product or package * Placing two or more items into a grouped item sold as a single item from the inventory file * A cost-effective way of procuring all components required to make an assembly * Products packed and labeled individually for each specific customer assembly * Assembly of product or parts within the warehouse
Kitting can be very beneficial when the assemblies have a high degree of variation. Think of the concept of mass customization. In contrast, kitting is less useful if the assemblies are highly standardized. In these scenarios, you might just end up with extra and unnecessary part handling. Adieu to your objective of lean production. More on this below.
As you can see, kitting comes in many flavors. But what is the overall purpose? While it helps companies keep inventory levels as low as possible, ensure that materials and products are available for production and customer delivery, as well as plan manufacturing activities, delivery schedules and purchasing activities, kitting can deliver even more benefits:
By reducing stock and using, kitting can save space that is normally allocated to manufacturing or inventory. Operations
Kitting can positively impact the efficiency of your operations. By eliminating the need to supply individual component containers, you can reduce material delivery to workstations. Similar efficiency is available if you are a manufacturer or distributor that uses machinery to assemble. You don't have to stop the lines due to part shortages or need to search for parts. Another benefit is that your shop floor can be cleaner because you're using fewer containers with more individual items in each, rather than a container for every component. Competitiveness
Two areas where kitting clearly adds economic value is by 1. increasing throughput in pick and pack and manufacturing operations, and 2. reducing Work in Progress (WIP) inventory. (WIP bottlenecks at or near the production lines can be reduced, or at least better controlled). By storing primary components and subassemblies in a centralized storage area, kitting can reduce WIP inventory at the point of assembly. Flexibility
Since components are not stored or staged at the...